Gap Down¶
A gap down occurs when a security opens below its prior session's close, leaving a price range on the chart where no trades were executed. The gap reflects overnight repricing driven by catalysts such as earnings misses, guidance cuts, or macro shocks that shift the market's equilibrium while the exchange is closed. Gap size is expressed as a percentage: (Open − Prior Close) / Prior Close × 100.
HOW IT WORKS¶
Gaps are classified by the degree of the opening displacement. A partial gap down opens below the prior close but remains within the prior session's range. A full gap down opens below the prior session's low, leaving a completely untouched price zone. Within those categories, gaps are further typed by context: a breakaway gap initiates a new downtrend on heavy volume, while an exhaustion gap appears after a prolonged decline and often marks capitulation. Screeners typically filter for gaps of 2% or more on large-caps and 4–5% on small-caps to exclude noise. Stops placed inside the gap zone cannot execute there — they fill at the opening auction price, meaning slippage equals the full gap size.
IN TAPEBOARD¶
Tapeboard's gap scanner surfaces gap-down candidates in real time at the open, ranked by gap percentage and relative volume. Traders use the scanner to identify gap-and-go short setups — a gap down with elevated relative volume and a failed initial bounce — and to spot potential gap-fill trades where a partial gap into the prior range may revert toward the prior close on thin volume. The overnight risk panel flags open swing positions exposed to gap risk ahead of scheduled catalysts, such as earnings or FDA decisions, so traders can size down before the close.